The No Asshole Guide: 3 Rules for Growing Your Business

Eric Schurenberg is the president and editor-in-chief of Inc. Before joining Inc, Eric was the editor of CBS MoneyWatch.com and BNET.com and managing editor of Money Magazine. As a writer, he is a winner of a Loeb and a National Magazine Award.

Andreessen Horowitz VC Ben Horowitz calls it "the black art of scaling a human organization." Stanford professor and leadership author Bob Sutton calls it "the problem of more." Whatever you call it, the process of creating more of what's great about your company without losing the essence of that greatness is a messy, complicated process. But it's self-evident that this is one mess you have to get right if you expect to grow your company to the next stage.

Parsing the difference between organizations that expand successfully and those that don't has occupied Sutton and his Stanford colleague Huggy Rao for much of the past seven years. The fruit of their research is Sutton's latest book, co-authored with Rao, called "Scaling Up Excellence: Getting to More Without Settling for Less." The book won't hit shelves until February, but last week Sutton gave Inc. Hire Power Award winners an advance summary of his key findings. Here are three of what he calls his scaling mantras:

It’s a ground war, not an air war.

The most important thing he and Rao learned in their seven years is this: There is nothing quick and easy about scaling. Just as generals can't win a war without sending in ground troops to capture and hold territory yard by yard, you can't expect to spread your company's best practices with fly-by solutions. "Scaling requires you to grind it out, pressing each person, team, group, division or organization to make one small change after another in what they believe, feel, or do," Sutton says. When companies scale well, they focus "on moving a thousand people forward a foot at a time, rather than moving one person forward by a thousand feet."

Your job is to instill a mindset in people, not just to create the biggest footprint.

You can advertise and social media-ize and make your presence so ubiquitous that customers see your logo in their dreams. But that doesn't constitute successful scaling unless your entire workforce--and particularly each new employee--understands what your company stands for. This is the essential psychological work of scaling, and it's essential to growing your company beyond the founding circle of employees.

Facebook, for example, puts every new engineer and product developer through what it calls "Bootcamp." For his or her first six weeks on the job, each new hire does small jobs for a dozen or so diverse divisions of the company. The experience gives the recruit a sense of the big picture at the company and helps set the expectation that no one gets to dig in at any one part of the company for very long. (That reality is reinforced by "hack-a-months," a practice in which most engineers spend a month on loan to another group within the company.)

Every newcomer gets a mentor, who is charged with indoctrinating the newcomer into Facebook's hacker ethos, captured by the motto "Move fast and break things." Sutton quotes one Facebook engineer who explains that if "you keep waiting for people to tell you what to do, don't ask for help when you get stuck, and won't show others your work until it's perfect, you won't last long at Facebook."

Small teams win while big teams suck.

"If your top team is dysfunctional or one of your managers is screwing up," says Sutton, "one of the first questions I ask now is, 'Is your team too big?'" Research shows that the best size for a team is four to six members. As the numbers of the team reach toward double digits, performance declines exponentially. In World War 2, U.S. Marine squads were made up of 12 men; controlling and communicating with a group that large under fire proved to be nearly impossible. Combat fire teams today consist of just four marines.

To explain the problems with team size, Sutton quotes research by Robin Dunbar, an Oxford anthropologist who was popularized by Malcolm Gladwell. If you belong to a group of five people, Dunbar and Gladwell point out, you have to keep track of 10 relationships: your relationships with the other four in your group, plus the six other two-way relationships with the others in the group. If you belong to a group of 20, you have 190 two-way relationships to keep track of. The team has only quadrupled, but the amount of information you have to track and process has increased exponentially--and so have the joint challenges of communication and cooperation, so essential to getting your team to pull together to scale.

Another problem is basic human (or even pre-human) nature. As your company gets larger, your employees tend spend more time on what Dunbar calls "grooming behavior," borrowing a term from primatologists who've noted that primates spend a great deal of their time cleaning one another as a way of cementing social bonds. In companies, the grooming behavior takes the form of gossip and small talk, but can consume as much as half the workforce's time.

Sure, you want your employees to get along, but you'd rather have them bond by talking about the job at hand, not last night's episode of "Breaking Bad." Creating a system of beliefs and behaviors that everyone understands and subscribes to won't solve all your scaling problems, but it spreads the burden among all your employees, not just the leaders, and makes everyone feel accountable for success. You know you're on the right track, when every employee begins to feel, as Sutton puts it, that "I own the company and the company owns me."